Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Bankruptcy definition

What does Bankruptcy mean? Bankruptcy is the formal insolvency process for individuals who cannot pay their debts. It halts most enforcement, vests the bankrupt’s estate in a trustee, and realises assets and surplus income for creditors until discharge. In England and Wales, under the Insolvency Act 1986, a debtor applies online to the Adjudicator for a bankruptcy order; creditors petition the court. The Official Receiver acts as trustee unless an insolvency practitioner is appointed. Discharge is usually after 12 months; income payment orders/agreements can run up to three years; bankruptcy restrictions orders may extend restrictions. Scotland uses sequestration under the Bankruptcy (Scotland)...

Bankruptcy’s impact on divorce financial remedies: jurisdiction, timing, challenges and practical dos and don’ts for family lawyers (England and Wales)

Published by a LexisNexis Restructuring & Insolvency expert

Practice notes

For family solicitors and separating spouses, the consequences of insolvency can significantly impact Divorce cases and, in certain scenarios, may mean the family court lacks authority to determine any applications for financial relief (including applications for property adjustment). This consequence has been explored in numerous decisions across both the insolvency and family jurisdictions. Regrettably, it is far from rare for Bankruptcy to be underway while divorce is also in train, and parallel proceedings can generate tension over how assets should be divided. While the family court seeks to make an order dealing with the assets (a Property adjustment order), weighing, among other factors, the parties’ and children’s future needs, the bankruptcy court focuses on distributing assets by reference to proprietary rights, placing creditors’ interests foremost. In practical terms, the insolvency court approaches division on a real property basis, with the creditors’ needs firmly to the fore. This possible clash requires careful evaluation, and the key issue will be the sequencing: the date the bankruptcy was commenced compared with the date any property adjustment order was made in any given case at all...

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Web page updated on 21/05/2026

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